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CARBO Ceramics Fell and Impacted Options Traders

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Oilfield services stocks with high implied volatilities

Seadrill (SDRL) rose 17.5% in the past year ending on February 21, 2017. It has the highest implied volatility of all the oilfield services companies that make up the VanEck Vectors Oil Services ETF (OIH). In the past five days, Seadrill stock fell 0.9%.

The above table shows the one-year and last-five-day returns of the stocks we identified in the previous part as having high and low implied volatility. Generally, high implied volatility stocks either fell or moved sharper than low implied volatility stocks.

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While Seadrill (SDRL) fell the least among the oilfield services stocks with high implied volatility in the last five days, CARBO Ceramics (CRR) fell the most during this period. Since February 15, 2017, CARBO Ceramics stock has been in a continuous downtrend, while its implied volatility rose 8.7% during this period.

ENSCO (ESV) gained the most in the past year among the list of high implied volatility oilfield services stocks. In the past four quarters, ENSCO’s revenue fell 45.8% and its operating income fell 71.3%. ENSCO’s operating profit margin is 34.9%—compared to the industry median of -3.7%. It’s expected to announce its 4Q16 earnings results on February 27, 2017.

CARBO Ceramics lost the most in the past year among the list of high implied volatility oilfield services stocks. In the last four quarters, CARBO Ceramics’ revenue fell 48.8%, while its adjusted operating loss was $27.8 million in 4Q16—compared to an adjusted operating loss of $32.3 million in 4Q15. Its operating profit margin is -97.9%.

Returns of oilfield services stocks with low implied volatilities

Halliburton (HAL) stock fell the most in the past five days among the list of low implied volatility oilfield services stocks. On February 15, 2017, Reuters reported that Halliburton could buy back its senior notes outstanding for 2018 and 2019. The total principal amount of notes is $1.4 billion. The redemption date for the notes is March 15, 2017. Halliburton stock fell 0.6% on February 15, 2017.

In the next part of this series, we’ll look at the oilfield services stocks with the highest short interest-to-equity float ratios. Apart from returns, high short interest can also cause volatility in a stock.

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